Financial Crisis 0
Yikes. Things are bad. There’s no mistake. Millions of jobs are being lost and a lot of those are in the automotive industry. But life goes on and people still need cars.
New Cars
Credit is moving slowly. Bankers are greedy and the entire global economy now apparently runs off of credit. It sucks but that’s reality. You don’t just walk onto a showroom floor and pay cash in full for a new F-150. It has to be financed. Getting this financing is now much more difficult than it was last year. And because of this lack of financing brand new cars are piling up at dealerships across the nation.
The good news? Any decent businessman running a car dealership knows that too much inventory is expensive. And to move that inventory off their lot the dealership will offer incentives in the form of large rebates and discounts. It’s actually a really good time to be buying a new car right now (provided you weren’t pink-slipped).
And how about those huge SUVs? They’re discounted even further. After last summer’s spike in oil price, the consensus is that the price of gas will eventually be headed back up again. Buying one of these 11 mpg beasts is a form of energy speculation. For all we know, gas could get cheaper. No one knows for sure.
Used Cars
So new cars are not moving off the dealer lots. But a sort of musical chairs with cars still has to take place so people can get around. During difficult times like these used cars will tend to stay out of the scrap yards just a bit longer. This places a premium on used cars and pushes up demand. Across the nation the average price for a used car is slowly climbing up. It isn’t huge, and is definitely not a good reason to buy that 20 year old jalopy/Jetta as an investment vehicle.
Conclusion
Count your blessings and appreciate what you do have. We’ll be counting pennies for a while. If your ride works and is safe and reliable, drive it for the next 6 months. If your job is secure and you’re looking to upgrade, there are definitely deals to be had. Normally I’m a “life is competitive & deal with it” type of person, but the American automakers are in some tough times. So I appeal to your sense of patriotism to at least consider the homegrown alternatives.
